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Markel (MKL) Incurs Loss in Q4, Revenues Beat Estimates

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Markel Corporation (MKL - Free Report) incurred fourth-quarter 2018 loss of $53.88 per share against the year-ago quarter’s income of $30.39.

Though the company witnessed higher revenues and improved premiums at the Insurance and Reinsurance segments, an increase in expenses was a bane.

Operational Update

Total operating revenues of $1.9 billion exceeded the Zacks Consensus Estimate by 0.3%. Also, the top line rose 13.4% year over year on higher premiums, investment income, product and services plus other revenues.

Total operating expenses of Markel surged 33.1% year over year to $1.9 billion.

Markel’s combined ratio deteriorated 1300 basis points (bps) year over year to 108% in the reported quarter.

Full-Year Highlights

For 2018, Markel suffered loss of $9.55 per share against the year-ago quarter’s income of $25.81.

Moreover, total operating revenues of $7.3 billion trumped the consensus mark by 1.3% and also improved nearly 20% year over year.

Markel Corporation Price, Consensus and EPS Surprise

 

Markel Corporation Price, Consensus and EPS Surprise | Markel Corporation Quote

Segment Update

Insurance: Net written premiums were up 14.8% year over year to $968.9 million in the quarter under review.

Underwriting profit came in at $9.5 million that plummeted 91.1% from the year-ago quarter.

Combined ratio deteriorated 1100 bps year over year to 99% in the quarter under discussion.

Reinsurance: Net written premiums rose 11.1% year over year to $87.1 million.

Underwriting loss of $115.3 million was significantly wider than the year-ago quarter’s loss of $49.3 million.

Combined ratio deteriorated 2900 bps year over year to 151% in the fourth quarter.

Financial Update

Markel exited the fourth quarter with investments, cash and cash equivalents plus restricted cash and cash equivalents of 19.2 billion, down 6.5% from the level at year-end 2017.

Debt balance dipped 2.9% to $3 billion as of Dec 31, 2018 from $3.1 billion at 2017 end.

Book value per share declined 4.3% from the tally at year-end 2017 to $653.85 as of Dec 31, 2018.

Net cash from operating activities for the year ended Dec 31, 2018 was $892.9 million, up 4% from that of 2017.

Zacks Rank

Markel carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Among other players from the insurance industry having reported fourth-quarter earnings so far, the bottom lines of MGIC Investment Corporation (MTG - Free Report) and The Travelers Companies, Inc. (TRV - Free Report) topped the respective Zacks Consensus Estimate while The Progressive Corporation’s (PGR - Free Report) metric lagged the same.

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